tv Markets Now FOX Business July 31, 2013 1:00pm-3:01pm EDT
one hour to go until we hear from the fed. chairman and ceo joining us exclusively in just a few minutes. we will talk finding some diamonds in the rough. lori: later this hour, treasury official under president george w. bush with what he is watching from the fed today. adam: desperate times call for desperate measures. five years after the housing crisis, one city is planning to use eminent domain to rescue underwater borrowers. the man behind the plan joins us to explain the controversial move the it lori: let's get you updated on the market. the calm before the storm. after we had a data deluge to start off the session. the jobs report topping expectations, 200,000 jobs created in july, revising up numbers for june. second-quarter gdp beating the street. the economy expanding at a pace
of 1.7%. that versus wall street estimates of 1%. the growth rate was revised downward just over 1% over the prior estimate of 1.8%. so that hurt. chicago pmi misses the street estimate but coming in higher than june. more market reaction on the floor of the new york stock exchange to check in with nicole. a new intraday high today. lori: that is right. a lot of numbers to take in. the big picture here is adp was good news ahead of the friday payrolls number. gdp number that you got income a lot of the traders the first thing we noticed despite a beat this quarter, the latest quarter was revised downward so the egg picture as they continue to get mixed economic news. dow jones industrial did hit a record intraday high, all-time high levels we have ever seen the nasdaq up 13th of 1%. herbalife, let's quickly take a look at herbalife hitting new
highs. after long-term speculation, he has taken a stake in herbalife. back to you. adam: nicole petallides, thank you very much. chairman and ceo of one of the world's largest investments banks is looking to diversify its portfolio with a diamond in the rough. howard lutnick backing jewelry manufacturer bridging the gap between online and rick and mortar retail by embracing what a lot of people call click and brick. i had a chance to speak with why consumers prefer this way of shopping. here's what he told us. >> when you talk to consumers, they love the convenience of shopping online. they can get educated, they can get knowledgeable. this is a cap located purchase. they like to go in the repost or to have a final confirmation. adam: that was brian watkins. he used to work at blue nile.
the person you want to hear from right now is howard lutnick. thank you for joining us. anan endand an honor to have yo. why did you put the money into this click and brick model? what do you plan to do with this in the future? >> what i was thinking about was ever we talked about online. if you just go online you don't have the trust factor. imagine the biggest investment you ever made and used to going to people like us, our age and the local jeweler protecting and defending us. what if you could have both? what if you could buy it at the online price, ship it to your local high-end jeweler and buy it there? adam: diamond district air in new york across the street. what you are doing is, think the statistics show 90% of diamonds people look online but only 10% actually buy online.
affiliated now, this business model with how many, 50, 60 different jewelers across the nation. the whole thing. >> the idea is adding retailers everyday. birmingham, virginia, new york, it doesn't matter, w we're addig great stores at these locations, you buy it online, you send it to the local jeweler and when you want to propose to your girl, you have a choice, she looks at you and says you stepped up. a big, local jeweler. adam: eventually people watching will be able to get in on this at some point in the future. >> what they can do, you can buy a diamond at the online price and get the trusted local jeweler who will defend you, fix it if it is loose. they are partners. we are going to do with you the online, off-line connection. working brilliantly.
adam: let's talk about business in another realm. the dow up 19% this year, the nasdaq up 20%, is this real, is this sustainable? >> it is called really, really low interest rates. once upon a time everything costing money to invest. right now no interest rates. real estate is going off the roof. art, off the roof, equities off the roof. interest rates are what, .1? adam:'s what i hear you saying is bubble. we're going to see the results of what intend to do with interest rates going forward, bond purchases. it sounds to me you expect a pullback in the dow. >> let's face it, we don't have an economy. growing at 2%, what is it? we were at 1.7, 1.7 today, but
last quarter we knocked down, so now we are growing like% or something. there is no economy. tapering just means they have been buying too much. it is with us for a long time, no interest rates are with us for a long time. assets will be valuable for a good, long time. 13, 14, 15. adam: i was talking to a friend of mine in your world who says in europe you can get corporate bonds which are stable and safe. why would you buy treasuries if you can get away with that? government going forward may face some difficulty the bond buying program may stall out, how much further can they go? >> united states has a couple of things. a printing press. we print our money with our presidents on it. in europe they printed with bridges. when germany runs out of money or france runs out of money,
spain, greece, what can they do? they can't print their way out of it. the only country that is a spectacular country in the world who can print their way out of it, at least we can go in the back room and pay. adam: you expect a slow pullback. >> it is based in the cake. no interest rates because we have a very weak economy. the assets go up, gold stays up, real estate up, these are just basics to no interest rates. adam: howard lutnick, it is great to have you here in the studio. we will have a whole package about what you are doing online. thank you so much. >> it is so much fun. thank you. lori: i think we're going to hear a lot more from the fed chair echoing the sentiments. in about an hour or so. to taper or not to taper.
the world waits to hear if and when it will begin stewing back asset purchases. peter barnes for the preview of the statement. >> one of the big questions the fed members will be tackling today is just how strong the economy really is because as you know, as bernanke and company have said peter lee, the start of tapering depends on the data. we got more interesting data today with the second quarter gdp numbers and revisions to the first quarter. so how will all of this play at the fed today and into taper timing? research says it is generally strong on a quarterly basis and likely to change the policy makers demand and deploymen empt will grow. while this is a better than better the mac x-rated report , it is clear many fed numbers
want to end it as soon as possible. this is not provided economic basis to do that since housing has added so much growth recently. probably may see some guidance from the fed in a statement today on the timetable for tapering. lori: thank you so much for bringing all the details to us, peter barnes. peter will join us with the fed policy statement. you want to keep it right here on fox business. adam: oil prices above $104 as economic data outweighs the unexpected build and supply. phil flynn of price futures group in the trading pit at the cme. what is the mood ahead of the fed announcement? >> almost like they are afraid of it right now. a lot of reasons for that, if you look at what has happened to oil inventories right now, it
was a bearish report, also reports of libya, 70% are off-line due to a worker strike. tightening supplies and it could impact what happens with u.s. exports or products. gold is afraid of the fed down $15. better than expected date of this morning making the taper worms really nervous. back to you. adam: thank you. lori: he is good. such a way with words. also making news, michael dell $24.4 billion bid to take over dell suffering a blow today. rejecting a request from michael dell to change voting rolls in exchange for better buyout offer. changing the record date so shareholders who bought shares after june 3 can vote on the
buyout. it is still scheduled for friday on the original 13.65, sku fusi, $13.65 per share. offer. of course, adam, we will be sending you back to austin. adam: a meeting could be postponed. it is all up in the air right now. lori: we are on it. meantime, rubberstamping plans. telling congress it can wait until after labor day to work on a debt ceiling deal. improving economy in federal spending cuts will allow the government to continue to borrow past labor day. national debt 16.8 billion counting. ford is expanding the f1 50 pickup line to include trucks that can run on natural gas. it will be available in 2014 and cost an additional $10,000 then the gas only trucks. currently honda produces a natural gas version of its civic. adam: next, the stock that if you listen to charles payne
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[ coyote howls ] how about no more surprises? now you can get all the online trading tools you need without any surprise fees. ♪ it's not rocket science. it's just common sense. from td ameritrade. lori: as we do every 15 minutes, let's check the market. as we do, news of facebook. nicole: it is not a surprise as we hear how facebook's work in new revenue streams. mobile ads have bben a grace for them. that is them that came out in the latest earning call. television type ads for facebook will be something going forward. when it hit the 30th dollars come above $38 ipo price and people sold off. compare the idea of the fact
facebook finally got back to $38 last may was the ipo. year-to-year data chart, on the top you can see link in soaring and facebook try to plate to ply catch-up. i cannot do a chart over the long-term, the truth is linkedin is up 350% from their ipo price, where facebook shareholders are happily sitting at the flat ipo price. adam: nicole petallides, thank you very much. we're making money with charles payne. so to streams proving once again it pays to listen to charles payne. lori: what is our next move with soda? charles: we have to write it out. first of all there is a lot of different narratives here. this is a major short play. the shorts have been on this thing.
i don't like them. i like the idea of shorting and what does for the market but there is no counter to shorts anymore. they can pound these companies to death and get on tv and pound these companies to death and ultimately they win and a lot of people lose opportunity, jobs, all that stuff so i'm happy soda reported a record number. cash flow up 48%. soda makers units up. when i went home last night i had iced tea flavor with the carbonate. really good stuff. guidance, revenue will be up 30% year-over-year. net up 33 instead of 20. everything you want technically you love charts bouncing off the bottom of the channel right now. if you like traditional valuation metrics, 0.8 peg ratio. that is not bad. the biggest number, 46%. that is how much is still short
right now. lori: i think you have every reason to short a stock. charles: you have a right to, but the large fund managers who gets billions and billions of dollars go in there and it is like first of all they have killed the small-cap market. people are now going on kick starteherto raise 200,000. there was a thriving small cap in this country where you can go in race three to $5 million. where can you get that money now? nowhere. there was a vibrant market and these big guys destroyed it all. at least 7 77 double top and thn maybe more. adam: a rough couple of months with sales in china, apple ceo tim cook is in beijing meeting
with the world largest mobile carrier and the only one in china not offering iphones or ipad. joining us now, what is up? >> adam, this is tim cook's second trip to china this year alone. busily highlights the problems apple is having in the mainland slowing sales and negative press. his meeting with china was specifically to discuss cooperation. a deal right now would be a game-changer. tim cook needs this more than ever because it has been such a bad year for apple in china. chinese consumers have problems with after sales policy and apple came out and had a formal apology after a loss of social pressure. the iphone maker was slammed last week regarding donations they had promised for a big earthquake back in 2008. the report over the weekend claimed ipad and iphone maker of abusive labor practices in chinese factories.
a lot of fires for tim cook to put out. others are gaining ground in the lower end phone market. china sales for apple were down 14% from a year ago, apple saw 43% drop from the previous quarter. the bottom line, this trip is very much about making money and saving face. another potential item is of china can participate in the global product launches which have been delayed between two and three months because of government rule. it would be a very good coup if the iphone six could be launched in china. it could help pickup sales in china. 45 million people on the internet in china, 78% of them access the internet through their smart phone. adam: sounds like tim cook is kissing and making up. thank you very much. time to go to the next.
>> 24 minutes past the hour, this is your fox news minute. in egypt police have in order to start clearing out the protesters. the military backed government is calling these citizens, but supporters of mohammed morsi. morsi was kicked out by the military and since then at least 260 citizens have died in those demonstrations. president obama's national security team is acknowledging some limits the government's domestic surveillance program appeared to be inevitable. but intensively before the senate judiciary committee, and is a member stressed to lawmakers the surveillance powers needs to be kept intact. in nevada, o.j. simpson has been granted parole on charges stemming from his 2008
kidnapping and armed robbery conviction. he was going to fight those. that does not mean he will be leaving prison anytime soon. he still faces at least four more years in prison on a different conviction. he could be eligible october 2014 at the earliest. those are your headlines, now back to two fabulous people, lori and adam. lori: right back at you. the ford bronco chase all those years ago. he is still in the news, mr. simpson. what is the latest, will he ever flip? fox business senior correspondent charlie gasparino is here with the latest. charlie: the portfolio manager indicted, maybe the fed believes he passed insider information, although they had not charged steve cohen. he is the center of this whole sac insider trading. there was a rumor today, sometimes shooting down rumors is a good story, that he might
be cooperating. remember the feds all but promised publicly a superseding indictment on his original guidance. new charges, they would do it in july. at the end of july. space relations started swirling they are cooperating, sources close to the legal team pointed out represented by an able lawyer, he is not cooperating. he is still facing down the federal indictment and 20 some years possibly in jail for insider trading that the type of charges they leveled if he gets the max warrants. they are still pressing a case against him. i believe he goes on trial november, but as of right now
despite those rumors, from what i understand he is not cooperating. lori: the government still put together a case and indicted the firm without him. charlie: remember, he is key to a possible indictment or one of the keys. i don't believe it is the only key. it is one of the keys to possible indictment of steve cohen himself because remember the way the trades that got him in trouble went down he traded on the shares, he traded on those and he sold a massive position afttr hearing from a doctor who is now cooperating new about clinical trials that would affect the stock and right before he sold the stock, sac sold the stock, they had a conversation with steve cohen. adam: if they cannot get him to say it, it sounds steve cohen is not in trouble and maybe they don't have a strong of a case?
charlie: it sounds pretty strong. he has a good lawyer. representing peter, wrapped up in the market. good lawyers lose, but strasburg one of the best criminal white color lawyers around. he has able counsel to go to battle with the federal government. he obviously has a few bucks because he made a $9 billion bonus one year at sac. u.s. attorney's office in the southern district, you know what their conviction rate is? it is above 95%. adam: without wiretaps or him flipping, they don't get it. charlie: you are right. i think the case is strong. no case is bulletproof. saying i gave him information he knew to self.
the question is why isn't he indicted yet? he has not yet indicted what is in that. this is going above people's heads. if you read the indictment of sac, there's a good case to be made he didn't say anything that is culpable that could prove the guilt of steve cohen in that. so the public statements made by u.s. attorney with the district police colonel enterprises or a place they allow people to do illegal stuff for insider trading and where the notion of insider trading isn't discussed directly where people know to speak in code. edge, conviction levels. who knows what was said during the seven minute call. were they saying the description of what he was given
allegedly was there a lot of meat on the bones you can make a case? it can be the fact he did not have that kind of conversation and that is why he is not cooperating. saying why should i cooperate? lori: it is intriguing, it really is be at this before it is. it is a game that will be played out in the next couple of months. adam: thank you, charlie. about 30 minutes away from the fed latest policy statement. lori: what should you be looking for? former treasury secretary and senior economist joining us next. i'm only in my 60's...
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♪ how did he not see that coming? what's in your wallet? adam: time for stocks. now we head to the floor of the new york stock exchange. nicole petallides is watching air products, nicole. >> very interesting here. take a look at the stock as it hit a new high today and we are learning that hedge fund manager bill ackman unveiled a huge bet. now when i say huge, i mean $2.2 billion. this is the biggest bet ever that the hedge fund manager has made for air products and chemicals company. it is up 3/4 of a percent. pershing square owns 9.8% of the company. what is interesting if the company had not adopt ad poison pill defense to prevent company takeover they may have acquired
more. this position has been kept under wrap for two months! back to you. lori: timing is everything, nicole. thank you. call it christmas in july for economists and fed-watchers. we have a pair of better-than-expected economic reports ahead of the fed statement due at the top of the hour. will the data affect the fed's timeline on tapering? no one bettory ask than phillip swagel, professor at the university of the maryland and insider at the treasury department and federal reserve. great to have you back. what is likelihood we get the decision on interest rates at top of the hour, keeping interest rates at ridiculously low levels ongoing but on question of asset purchases that bernanke and company will come out and say we plan to decrease the number and the value of our asset purchases and it will commence in sent, october, very little, right? >> yeah, lori, i still think it is too soon for the fed to do that. today's data are good both on gdp side and adp jobs number but it is not enough. the fed wants to really see friday's number on jobs and at
least another month or two before they start to taper. they will recognize better data but say we're still looking for this to continue. lori: better data but let's really dig into that because even though the first print on second quarter gdp came in much better than expected, the downward revision of final take for the first quarter was a huge disappointment. howard lutnick was on the program talking with my colleague adam at the top of the hour saying we don't have an economy. do you agree with how he characterized it? >> we have growth and job creation but they're mod today -- moderate but they're not at satisfactory pace. i wouldn't go as far as that but i agree it is just not satisfactory. this pace of gdp growth is not strong enough to drive the job creation that the fed wants to see before they start pulling away from qe. lori: the fact this economy as lackluster as it is, firm, would you agree if you pulled out that qe, at anytime, would the economy just crater? so having said that then, when
is the right time to start backing off the stimulus? >> yeah. i mean that is one of the dangers what the fed has done. they have made it so markets are really dependent on qe and they have to back away gingerly. we've seen the difficulties of clumsiness of the communications. so i think they will do it, right? as the economy continues to strengthen they will back away from qe and do it slowly and wait, as i said until job creation is really solid and they're sure it is sustained. lori: we know that they have put a target, right, around 6.5, to 7.5% unemployment but what other factors, what other drivers of the economy would you like to see get a shot in the arm and do you think they will in the next year or so? >> yeah, i'd really like to see both consumers and business spending coming in. so what we saw in today's gdp data business invest was pretty reasonable especially in structures. my guess a lot of that is oil
country, pipeline growth, construction of pipelines and we know that president obama could make that even stronger if he would just approve the keystone xl i would like to see consumer spending come in at the same time. we see confidence in both businesses and consumers and have a broad recovery and not a patchy one like we've had so far. lori: will the economy benefit from corporate tax reform like the president is proposing? >> well, i don't call what the president proposing is reform. it looks more like a tax increase to me. tax reform is really important. i think the economy would benefit. in the near term, you know, it is hard to see it happening but i'm glad the president at least is talking about it. but details matter and his aren't so good. lori: okay, phillip swagel, we'll see what the fed does at top of the hour. thank you for joining us. >> thank you. adam: stocks clinging barely to gains just 20 minutes before the fed's statement. we'll get a view from the trading floor next. lori: five years after the housing crisis began one california city is going to controversial lengths to save underwater homeowners.
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he is accused misleading investors in a deal that cost them one billion dollars. faces fines and a possible lifetime ban from the securities industry. securities & exchange commission is investigating how ibm reports sales for its cloud computing business. in a regulatory filing the tech giant says it learned that the investigation back in may actually. since launching the unit in '07 ibm spent billions acquiring cloud related businesses. kodak has a picture of its post-reorganization management plan. ceo antonio perez will stay on up to a year after it emerges from bankruptcy or until a successor is named, whichever comes first. latest from the fox business network, giving you the power to prosper.
looking to use eminent domain to save homeowners underwater with their mortgages. we're joined right now by a chief proponent of this idea, cornell university law school professor rock be robert hoc the et. it's a controversial idea because banks are threatening it is unconstitutional. who will win in this one? >> hey, adam, thanks for having me on. i don't think there is worry as far as constitutional arguments go. i assessed all the constitutional arguments the industry raised and looked through them and there seems to be no legal difficulty with this at all. it is really more a political matter. can we get all parties to the table to agree mutually on loan selection criteria and valuation criteria. adam: in the case of richmond they are planning to buy 626 homes which the mortgages are underwater and don't have, this is key, second mortgages or lines of credit that could be an obstacle. >> yes. adam: but at the end of the day who will pay for it? is the city going to put up cash to refinance or purchase the
loans? or is there a bank out there who will supply the money. >> the idea is actually for bond investors themselves to put up the money right, because the whole point behind the idea enable securitized loans to be written down in a value salvaging way in a way bank-held loans already are. adam: bond investors, and you advise the federal reserve bank here in new york on occasion, who is willing to buy these types of bonds? has this pool of finance been identified? who is putting the packages together? >> well it comes from a variety of sources but the right of first refusal always goes to the bondholders in the loans that are actually going to be taken out of trusts right? adam: right. >> the whole idea is to enable them to do write-downs in quasi-voluntary way, the theory being they would do it voluntarily if they could but there are certain contract restrictions in the case of securitized loans that make it difficult for them to do what they find in their own interest and a lot of bondholders are
scattered all over the world an can't find each other. adam: let me keep this simple. is richmond going to do this and this will really happen? will it be tied up in court some years but at end of the day it won't matter? >> i don't think it will be tied up in court. california is quick take states. as long as city gives a plausible valuation story how they arrived at the value they are going to pay and put the right amount in escrow, at that point they can take the loans and any subsequent litigation is over whether they were paid enough. because orthodox valuation methods are use generally there is not any question about that i don't think litigation will drag out at all. adam: has richmond done this with any property yet. >> what they have done, made an offer. write to servicers of the loans and say we would like to buy these particular loans. we think we can write them down in a way that salvages value. if the servicers say yes, you
don't have to use emmen domain. if the servicers say we're restricted by psa, so-called pooling and services agreement of the we have to use eminent domain to get to that contract. adam: why or no, do you think the banks will fight you on this no. >> i think they will fight it politically. i don't think they will be in a legal way because the legal case seems una sailable to me. adam: robert, thanks for joining us. >> thank you, adam. lori: we're 15 minutes or so away from the latest fed decision. let's check the markets as we do that every 15 minutes as well. mark newton from the floor of the stock exchange. stocks barely are staying in the green but what is the word on the floor? where would you say the general concensus is on the taper debate, sent or later? >> we think it will be sent but we haven't seen any economic improvement to justify what the fed said to start tapering in terms of unemployment or growth. this morning's gdp numbers came up substantially higher but got revision from q 1.
it was substantially lower. we don't have that to justify. a lot of smart people say it has to happen sooner than later. one comfort we're seeing value of leveraged loans and also, the fact that these have come down substantially over the last month suggests that the fed is very much at comfort with qe and that shouldn't probably go away anytime soon. we're quiet here. lori: is the fed move priced in since we're seeing very little reaction or just a calm best storm situation? >> we have had a big move in the last month. the dow is up over it 1,000 points. last day of trading month we're up 5% it has been sleepy end of july. we've been sideways last 13 trading sessions. one time we were all-time highs and now we're back to almost unchanged. we'll see if we see any clarification in the statement. that's what we need. lori: all eyes focused on that. mark, thank you. >> my pleasure. adam: targeting chemical companies.
lori: bill ackman's pershing square taking a 9.8% stake in air products and chemicals for $2.2 billion. the news comes as nelson peltz's fund is reportedly amassing a position in due point. meanwhile the second largest company in the sector, dow chemical is opening a new research and development facility in collegeville,
pennsylvania. our liz claman is there all day. earlier she asked ceo andrew liveris is activists investors are circling companies like his. >> shareholder base for all of us we have to pay incredible attention. shareholders have to have a return or put their money somewhere else. returns are defined over time frames, short, medium, or long. today's world gives now optionality. you have to do all three. we're doing something like this for specifically long-term returns. lori: coming up in 2:00 p.m. hour, bill gets exclusive lab tour from bill wagner. and coming up at 3:00, liz speaks with pennsylvania governor tom corbett. adam: from one icon to another, make sure you're watching 1:00 p.m. eastern for your exclusive interview with the ceo of ups. scott davis will join us in studio to talk about not only the economy, global trade but what is happening at ups. lori: grill him. we're on fed watch with the dow
up nine points, fading here a little bit. the chairman, ben bernanke and company are just moments away from releasing new guidance on fed policy and take on the economy. tracy byrnes and ashley webster will guide you through all of it along with our peter barnes. that is next on fox business. don't miss it
uses 89% less energy. and costs 77% less. it's called hp moonshot. and it's giving the internet the room it needs to grow. this ...is going to be big. it's time to build better enterprise. together. tracy: welcome back. i'm tracy byrnes. ashley: i'm ashley webster. breaking news from the federal reserve is just moments away in under three minutes now. wall street and the world waiting to hear whether the fed will give any clues when and how it will start cutting back its bond buying. we will bring you the fed statement of course in just about 2 1/2 minutes. plus market reaction and analysis with our all-star panel. they're raring to go. check markets ahead of fed news. we're up across the board. we're certainly off session @ighs but certainly managing to stay in the green as investors wait to see what the fed has to say. only red arrow there is gold
moving down $14.70 an ounce, down to $1310. meanwhile, as we say, the markets well off its highs which makes you wonder whether they're like, okay, let's wait and see if there is any clues from the fed. tracy: that is good question. we'll ask our panel. let's bring them in. joining uggs doug cotetae, ing financial management. scott brown. former dallas fed chief economist michael cox. anthony valari, lpl financial. doug, i will throw ashley's question out to you. is the market pricing tapering already? >> i think they will be measured today. sent they are boeing to start tapering. very confident with that for two reasons. is one the economic data, jobs, earnings, diminished risk in europe. also on the may 202nd joint economic testimony to congress the fed said he is concerned
with quantitative easing's contributions to financial instability. he is a bit concerned and sent tapering is in the bag. ashley: scott, let me bring you in quickly here, do you agree with that assessment, sent tapering on the books? >> i think it is a pretty close call whether they go in sent or december. obviously it will be data dependent. the job numbers will be key. we get two employment reports between now and then. people should remember the asset purchase program was never meant to be permanent. the main purpose was really to get the ball rolling, get some momentum in the economy which point it would be pulled back and you will sill have very low short-term interest rates for a very, very long time. that will continue to provide support for the economy. ashley: gentlemen, we're kind of ticking down to when we actually hear from the fed through our very own peter barnes. a lot of people are saying don't expect anything today. it will be full steam ahead until the economic data will
prove it is indeed time for the fed to start easing back on qe although there are many of those out there that speculate the fed would love to get out of qe right now. the question is, does the economic data support it? bake breaking news from the fed with peter barnes. >> no change, no change in current policy no change in current policy. the fed continues kwan quantity bond buying at its current pace of $85 billion a month and maintains its policy of low short-term interest rates. let's go right to the economic analysis in this fed statement. quote, information received since the federal open market committee met in june suggests that economic activity expanded at a modest pace during the first half of the year. labor market conditions have shown further improvement in recent months on balance but the unemployment rate remains elevated. household spending and business fixed investment advanced and the housing sector has been strengthening but mortgage rates have risen somewhat and fiscal policy is restraining economic growth. partly reflecting transitory
influences, inflation has been running below the committee's longer-run objective but long-term inflation expectations have remained stable. the committee expects with appropriate policy accommodation commission growth will pick up from its recent pace and the unemployment rate will gradually decline towards levels the committee judges consistent with the dual mandate. sees risk for economy and labor market having diminissed since the fall. the committee recognizes that inflation persistently below its 2% objective could pose risks to economic performance but it anticipates that inflation will move back toward its objective over the medium term. to support a stronger economic recovery and to help insure inflation overtime is at a rate most consistent with its dual mandate the committee decided to continue purchasing additional agency mortgage-backed securities at a pace of 40 billion per month and longer term treasury securities at a pace of 45 billion per month. these actions should maintain downward pressure on longer-term interest rates and support
mortgage markets and help make broader financial conditions more accommodative. the committee will closely monitor incoming information on economic and financial developments in coming months. the committee will continue purchases of treasurys and agency mortgage-backed securities and employ its other policy tools as appropriate until the out look for the labor market has improved substantially in the context of price stability the committee is prepared to increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes. to support continued progress towards maximum employment and price stability the committee today reaffirmed its view that highly accommodative stance of monetary policy will remain appropriate for considerable time after the asset purchase program ends and the economic recovery strengthens. in particular the committee decided to keep the target range for the federal funds rate at zero to a quarter percent and currently anticipates the exceptionally low range for the federal funds rate will be appropriate as least as long as the unemployment rate remains
above 6.5%, inflation one and two years ahead projected no more than half a percentage point above the committee's 2% longer term goal and longer term inflations expectations continue to be well-anchored. voting for the policy action today, 11-1 was the vote. 11-1 with esther george of the kansas city federal deserve dissenting once again. the statement says she was concerned that the continued high level of monetary accommodation increased risks of future economic and financial imbalance and over time could cause an increase in longer term inflation expectations. tracy and ashley, back to you. tracy: peter barnes, thank you very much. so a lot of the same, a lot of what we were expecting, continuing 85 billion-dollar monthly purchases. let's get a check on how stocks, oil, gold are all reacting to this fed news. we've got team coverage. nicole petallides on floor of the new york stock exchange. phil flynn in pits of the cme. phil, let's start with you. i know it takes market to react
to this kind of stuff. >> i hang on every word as the peter barnes is delivering all findings on economic committee. the market was sitting and trending a little higher. it was up maybe 12 points it. was sentence when he said, really they're not going to do anything, they're not going to taper back that bond-buying until the labor market improves substantially and that certainly was the language right there where i looked up and the market began to take off. i know that everything seems to be improving. economic activity should be improving. unemployment should be coming down. downside risk, that's been diminishing. that's all well and good but the question was, when will they begin the tapering? when will they cut back on the bond-buying. it certainly doesn't seem like anytime soon. as a result you see markets take off. they're loving it. the major market averages improving, really flattened going into the fed statement. art cashin over at ubs anticipated that the markets would just try to take a neutral
stance until we heard from the fed but basically they're not doing anything. they're keeping it just the way it is. in addition to the fact they're doing great monetary policy that is very highly accommodative they're really once again saying fiscal policy is holding us back. back to you. ashley: nicole, thank you very much. another aspect of this, let's look how the 10 and 30-year treasurys are moving as they were ahead of the fed and how they're looking now. we did see a spike on the 10-year bond earlier today as the adp numbers came in showing we added 200,000 jobs which was better than expected. as you can see receipt now the yield on the 10-year, 2.64%. also seen some movement on the 30-year. some of these yields have been coming down, as you can see unchanged after raising just a little bit unchanged at 3.68%. let's go to the cme. fox business contributor phil flynn of price futures group. what are we seeing there, phil? >> i think most of the commodity reaction is going to come from the dollar. of course the dollar was gaining
strength on fears that the fed would be tapering back. that means a stronger dollar, weaker commodity prices. after the fed's statement it seems to suggest that the fed, is still concerned about low inflation and that's a threat to the economy. it is driving up both gold and oil right now. ashley: all right, phil flynn, thank you very much. you're absolutely right, the dollar now coming down a little bit after being strengthened. that is bad news for commodities because it is more expensive to buy those products. so the dollar weakening a little bit now. tracy: let's bring in the panel to get reaction on the news. doug scott, michael anthony, still with us. michael, on a comment nicole made, market shot up basically hearing that the fed will not do anything unemployment changes. adp, 200,000 jobs in the private sector. the fed has to take notice that there are jobs being created. does that make a difference? >> michael cox you're talking to or michael anthony? >> no, just you're only mike on
your panel today, sir. >> that is far bee let job creation we need to get back to the 5% unemployment rate america enjoyed from 1995 to 2012. we had, 5% unemployment rate for many years. now we can't achieve that anymore if we're going to keep adding just 200,000, actually only 118,000 jobs a month. still subpar job growth. the gdp growth rate we're having the average of this recovery of 2.2% which is far below the average of 5% we had every recovery on average post-world war ii. this is still from the fed's viewpoint a call for loose monetary policy. the problem is the fed has the economy squarely in a liquidity trap. the economy can't grow because banks won't lend. banks won't lend because interest rates are so low. interest rates are so low because the fed wants them there. the fed wants them there because the economy is weak. that is catch 22. known as keynesian liquidity
trap. what else would you expect from the keynesians? taylor rule calls for 2.85% fed funds rate. instead we have a -- 0.25 funds rate. we're far below and much loser, easy monetary policy far beyond the time it is called for. ashley: anthony, talk about fixed income. anthony, you say look, there is probably limited upside at best for the bond market. you are sticking with that and what would you do in this environment? we know the fed would like to taper but based on this statement not anytime real soon. maybe sent. we didn't really get more after hint of that today though. >> no, we didn't and that's to be expected. this is pretty as-is statement. i think if anything it leans to the dovish side. i think you're seeing the bond market react to with lower yields coming off yields coming down since the peaks this morning. really a range-bound market for bond. the market continues to digest the fact, yes, at some point
we'll have a taper, probably in sent but that's not a sure bet. in that market is pricily for it. any upside is limited, yes, because of the taper and with what it means to bond valuation. you play this market with some sectors hit a little bit too hard from the tapering fears. that is municipal bond, lower rated bond which allow to you capture a higher yield because the economy is still growing even if sluggishly. that is how you play the range-bound, until we get more clarity from the fed. i think bulk of the bond market selloff is behind us. think we're in a range. tracy: are we in a range in the equity markets as well, doug? a lot of people talking about that supposed pullback we haven't seep yet, right? this notion we'll keep getting more money, more money at least until sent, does that make summer, that makes fears of a pull back on the summer on the sidelines for now? >> i call this getting back to normal trade. getting back to normal is the safest, market right now is to
get into equities to reduce market volatility. equities are the safest trade, to get more to a full allocation, more to a 60-40 stock bond allocation. that is where you want to be for the rest of the year. so i think it bodes well for equities and i think if you're getting back to normal, 3.5% on the 10-year is normal, it is not going to be this year, might not be next year but it is coming and tapering again will begin in sent i believe. >> with all due respect i don't agree with doug on that. if my analysis says that the, that the stock market is highly sensitive to increases in interest rates. each 100 basis point increase in the 10-year t-note will drive the market down 9.5%. it has historically on average for 110 years. for me the safest place is not fixed income or bond as interest rates go up or stocks which are
alternative investments which are orthognal to the market. ashley: that is interesting. get doug's response to that. what do you think, doug? >> offset to the analysis is record corporate earnings. in this environment where we, i ratcheted up my expectations for earnings from $101 this year to 110 because u.s. corporations are finding a way, they're not just looking at u.s. they're looking at frontier markets. they're looking broadly diversified. they're getting it done. so with record corporate earnings i think that argument is disputed. >> scott, let's talk about -- >> that's a good point. tracy: if i could get scott in. mortgage interest rates are inching up a little bit. we'll keep buying 85 billion a month to keep interest rates low. what happens to interest rates? is it really making a difference if the market will push these rates up anyway? >> well, i think there is a bit of an overreaction to all the tapering talk. i think the fed was certainly surprised by the market as
reaction through may and june and early july. it doesn't really, technically doesn't really matter much whether the fed begins to taper in sent or december. we know this will end at some point. the fed's been trying to emphasize the fact that short-term interest rates will remain very, very low for a long time. so they're going to continue to provide accommodation. they're even providing accommodation as they're slowing the rate of asset purchases. but, you know, it will end at some point. i think markets really kind of panicked. the markets may have been set up for reappraisement of risk in the bond market. so we're seeing things kind of settling down but it is still a bit unsettled. i think that may be the reason the fed chose a little more balanced rhetoric than we were getting out of bernanke's press briefing. ashley: let me finish with anthony. i want to come back to the fixed market, anthony, and talk
quickly about municipal bonds. high yield bonds, investment grade, mbs and perhaps muni bond could be a beneficiary of this dovish policy but there's a lot of money it seems coming out of those muni bond right now? >> that is the typical reaction you have when you have a sharp selloff. you see a lot of mutual fund redemptions that feeds on itself. if you compare aaa municipal bond, 10-year aaa close to aaa rated corporate when you take out taxes. that is one of the most extreme distortions since late 2010 and early 2011. really good valuations on muni, some. sectors i agree with the overreaction of the bond market to qe tapering fears. you look at sectors that have been overly punished from here to the end of the year. that is where your best risk/reward is in our view. it is clear that the fed statement bernanke mentioning higher mortgage rates they're concerned about higher interest rates. so they have a vested interest in keeping rates low and being market friendly.
tracy: you guys were terrific. our all-star panel. doug cote, scott brown, michael cox and anthony valari. thank you all for being here today. >> thank you, tracy. ashley: we're watching the markets every move in reaction what we heard from the fed. a live update from the new york stock exchange coming up next. tracy: plus a strategy session for president obama and democrats ahead for the next spending battle. expert and former ceo director don marron will tell us how this will play out ahead. apparently he has a crystal ball. let's look at oil and other metals. we'll be right back. with the spark miles card from capital o, bjorn earns unlimited rewas for his small business take theseags to rm 12 please. [ garth ] bjors small busiss earns double miles
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with the bounce dryer bar, my clothes will be fresh out of the drawer for weeks. and it's great when things last a long time. well...most things. [ male announcer ] how do you get your bounce? [ woman ] can't regret fresh. ashley: welcome back, everybody. the fed signaling no change to its bond-buying. no big surprise there. nicole petallides on floor of the new york stock exchange. nicole, it was interesting. we shot up when we got the fed's statement. now we're heading in the opposite direction an down 25 points. >> that is very interesting and the dollar has changed direction. look what happened. we got the pop and that may have been on language they were keeping everything the until the market, the labor market improved substantially but when you look closely at the fed speak, inflation persistently
below its 2% objective could pose risk to performance. so they anticipate it will get back on track but that may have been something that was troublesome to wall street. 2.63% is where the treasury market is right now. two names we're watching closely, facebook and herbalife, both which hit new 52-week highs. facebook with new t v-type ads hit a high and pulled back. it was as high as 38.31. and herbalife, 66.26 was the high today after we found out that george soros has a nice stake in herbalife. back to you. ashley: nicole, thank you very much. we'll be back to you at the top of the hour. tracy: market needs a little time to digest it before you truly understand what it is thinking. we have a lot more going on today. president obama meeting with democratic leaders on capitol hill laying out a big ol' gameplan for key fiscal showdowns this fall. rich edson on capitol hill with more. hey, rich. >> a bit of a homework assignment if you will.
house democrats, senate democrats, all of congress heading home after this week for a month-long recess. they will have to talk to constituents, do a number of interviews on home. democrats are getting on message, republicans are getting on message. if you listen to house and senate democrats speak after meeting with president obama this afternoon they were told by the president we've also been told by the president over last couple days. themes like job, middle class, growth, all of those themes popping up in the readout we got from a number of democrats after meeting with the president of the united states. there was also some talk about who president obama may select to replace fed chairman ben bernanke and possibility your chances that it may be larry summers. >> he has a long list of people he's talking to. and he indicated that there's not a, his words, not a piece of paper difference in all of them. larry summers is a long-time friend of mine. i like him a lot. i think he is a very competent
man but that decision is up to the president. whoever the president selects this caucus will be for that person no matter who it is. >> this is less than a week after a number about prominent liberal senate democrats writing a letter to president obama urging them to select fed vice-chair janet yellen. they didn't exactly knock larry summers though some did say they were concerned about larry summers viewers an history on regulation or as they put it, deregulation. back to you. tracy: rich edson, thank you very, very much. former cbo director donald marron says spending squabbles will come to a head very soon. he is our special guest ahead. >> look how the dollar is moving after we heard from the fed. a bit of a mixed bag. the euro moving high every against the dollar. u.k. pound though losing a little built of ground to the u.s. dollar. we'll be right back.
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potentially could have moved market. man, did they move. there were some swings. went up as high as 50. came back down, negative 25 at one appointment we're positive 20. nasdaq, s&p all positive as well. oil up slightly. $1.82 a barrel at $104.95. gold is also down, inflation, not so much of a concern i guess, down about $8. ash? markets are a little confused. ashley: they are. like on a trampoline right now. time to make money with charles payne. yesterday charles took a look at young, hot, american companies. today he is looking at old hot american companies. the cougar. >> we talked about yesterday, thinking about the stock market as if you had a next door neighbor that start ad business doing well and he or she invited you in. let's say you didn't want to take that risk but you also drive to buy a gas station or always put tires on your car. in other words, they're old
established companies that have ways of not just staying relevant but reinventing themselves. let's talk about a couple. hess, for instance, they reported overnight. the stock is up huge. up almost 5% from the fifth low. lee on hess in 1933 started company as oil delivery company. asbury park. bought a 7-year-old truck that held 615 gallons and delivered door-to-door. obviously evolved to a lot more. rl donnelly, start ad small print shop in chicago, 1864. his big break came when they decided to make a business director in chicago. big deal. do paper containers. a lot of people think it is a harbinger of things to come. that we need more corrugated boxes and labels. and goodyear tire. frank siberling started off with bicycle tires and carriage tires. this is what is interesting, he borrowed 3500 from his
brother-in-law, might be the brother-in-law of century. i don't know what he got in return certainly wish he got a few shares and his ancestors did as well. we talked yesterday about the idea of young, hot companies out there that reflect american ingenuity. more risk if you doesn't want to go that way. older names have troubles from time to time but they're tried and tested. they seem to find a way to reinvent themselves. you're right, they're tried and tested. >> good year i keep blowing tires. >> driving down 48th street in new york! tracy: i keep driving with goodyear tires. ashley: see you later, charles. >> appreciate it. tracy: the economy growing faster than expected last quarter. what will it mean for fed policy and a big ol' budget battle and more. former cbo director don marron is here next. ashley: we'll look at some winners and losers on a volatile day from the dow as we hear from the fed. take a look. we'll be right back.
it is worth noting that you are seeing some of the dow components. right now it seems pretty status quo. ashley: thank you very much. tracy: let's go back to peter barnes. peter: we like to parse the statement. we sell economic activity downgraded slightly. this is the first time that fomc has used the word modest to
you may see it for tapering or waiting on tapering on quantitative easing. when you see that highlighted, we want to pay attention to it. ashley: thanks a lot. cheryl: all right. we have some breaking news. prices rising $1.95. it is a gain of nearly 2% on the day. ashley: the president offers up aatax proposal remix. the fed will continue its bond buying program. the debt ceiling is looming.
washington has a lot of fiscal policy issues to get an order. he is joining us now with his take. there are an awful lot of issues and topics to get through. do you think it is fairly accurate? >> it is not a sign of a strong economy. ashley: it is a difficult situation. we are not sure what the future brings. we are concerned about the
economy overall. the unemployment rate is so high in the fed recognizes this. we all seem to be trapped in this vicious cycle. >> we saw a little sign of hope this morning. folks that adp put out their jobs estimate. on friday we will hear from their real folks about whether or not that is accurate. there are a few positive signs out there. we are growing at a reasonable, moderate pace, but not fast enough to bring down the unemployment rate. ashley: we have been hearing from the president who has been touting his plan around the country. investing in infrastructure. how do you pay for it?
>> that is exactly the question. you have the president running on a 28% rate and 25 for manufacturing. really close together. but, as you just said, incredibly hard to know how you just paid for it. obviously, yesterday he talked mostly about the investment stock and lowering the rate. ashley: and then of course we have the debt ceiling. that will be coming around later in the fall.
what we have a standoff in washington? >> i think we have that coming in the fall. when we get to the end of the promise, we have to find a way. there is still an enormous amount of negotiating to be done about which members of congress will fall and go for it going up. ashley: do we actually get any meaningful role for other than entitlement programs? >> large care reform are beyond what congress is capable of at the moment given where we are. i think there are some opportunities in the healthcare program. do not anticipate anything big. ashley: i would not say you are
an optimist. >> trying to be a realist. ashley: think u so much for joining us. telling itthow it is. tracy: we need a realist sometimes. dow chemical trying to reposition itself after 123 years of business. liz claman is live testing out some of their hottest new products. that is next. ashley: as we do every day at this time, let's take a look at the ten and 30 year treasuries. we are still up. unchanged on the 30. we will be right back. ♪ your house was built on an ancient burial ground.
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liz: ashley, we are now inside the lab. that is why i am putting on my protective glasses. to show you the innovation that is happening for every day life. who among us have not stopped towels under door jams or windows to keep hot or cold air out? what about boiling hot roofs? i want you to come meet bill wagler. >> nice to meet you. you heard me talk about the feeling paint and boiling hot rooms. >> this is cool roof technology. we have a typical group you would see. this is a rubber roof. black in color.
colt that with a coating from ingredients from dow. liz: if i leave my hand here longer, i will burn it. this is the cool roof. barely warm. >> your cooling bills are significantly lower. liz: how does this not peel? >> what we did was we took two footballs. we coated one with the regular house paint. one with this material. this is very stretchy material. liz: this is regular house paint. >> right. it would get exposed. this is not cool roof with the polymer type allergy.
liz: i will break my manicure before i break this. [laughter] liz: bendable paint that does not even crack. let's move onto the other issue i talked about. keeping cold out and keeping boiling hot out. this is so appropriately titled. it is called great stuff. it was developed by dow chemical. if you use this, atypical 2000 square-foot home, and one day, you could fill two goodyear blimp's with the amount of airflow in there. liz: just from cracks? okay. >> squeeze the trigger. done it across.
liz: does this keep things out like ants and mice? >> yes. liz: how long would it take to dry? >> it dries in about two or three minutes. liz: normally, you would need an industrial guy to come in. the other thing, if you have an issue, if you get it somewhere it you do not want it, take this. you can wipe it out of there. still at it just comes and wipes right off. fascinating. it is a pleasure. >> thank you. it was great to meet you. thanks for coming out. liz: today is the ribbing cutting day. in the next hour, coming off of the top of the hour, we have an
exclusive interview with tom corbett. a fox business exclusive with the ceo and chairman of dow chemical's today. we are continuing our conversation on how to take this innovation and turn it into real shareholder value. all about coming up with exclusively. back to you guys. ashley: really good stuff. congratulations. what a natural. thank you very much. stay tuned for liz claman later on. tracy: great stuff. i love it. it is a quarter till. time for stocks now. mark newton joins us today. up 60 points. it seems like the market needed a little bit of time to digest.
there certainly were some changes in the language. >> that is true. we are right back at record highs. we are in the final day of the month. we had seen the ten year yield spike up to the highest level since july. those have backed off pretty substantially. we have not really seen any real difference change of language, in my opinion. we can increase or decrease as needed. the market still sees no signs of tapering. that created a rally. we will see if we get any sort of decision in september. unemployment is still a concern. we will see, things right now are on hold and the markets are rallying. tracy: markets are rallying
killer? ready to launch 152nd ads. online is where the people are. facebook is where they hang. it is all a matter of time. the internet now gets 26% of our time and only 22% of ad dollars. lookout mobile. facebook aims to fix that imbalance. look what facebook brings to most importantly, up to 100 million americans are on facebook daily. eight-11:00 p.m. every single day. facebook started allowing video clips to play on instagram.
each ad could cost up to $2.5 billion for a one day run. that is a nice extra revenue. imagine the upside. if facebook started selling ads based on other factors, not just your age, but your politics. ads like that would be worth a lot more. facebook refusing to convert any of this or answer any of my questions. this comes at a time where deals to bite tv stations are running wild. that is because all of the tech knowledge he last longer than we expect. the new kid on the block always takes a lot longer to really arrive. ashley: you can see which direction it is really heading. dennis: you can.
ashley: dennis, thank you very much. tracy: good stuff. ford getting in on the action. the nation's second largest automaker will offer an f150 pickup pickup truck that runs on compressed natural gas starting this fall. it will cost nearly $10,000 extra. customers could start to see payback in their investment in as little as 24 months. that gas is cheaper and cleaner than oil. on pace to sell more than 15,000 vehicles. coming down, down down to "the closing bell." with liz claman get a
behind-the-scenes look. she sits down with an exclusive interview with dow ceo chairman and president. you only see back here on fox business. do not go anywhere. ♪ [ male announcer ] the mercedes-benz summer event is here. now get the mercedes-benz you've always dreamed of. but hurry...because a good thing like this won't last forever. here you go, honey. thank you. [ male announcer ] see your authorized dealer for an incredible offer on the exhilarating c250 sport sedan. ♪
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